What deposit do I need for a buy-to-let mortgage?

Most buy-to-let lenders cap lending at 75% loan to value, so the standard deposit is 25% of the purchase price. A handful of products reach 80%, priced noticeably higher, and the most competitive rates start around 60% loan to value.

What is the interest cover ratio (ICR)?

The interest cover ratio is the lender's core affordability test: expected monthly rent divided by the stressed monthly interest payment. Lenders typically require 125% for basic-rate taxpayers and around 145% for higher-rate taxpayers, calculated at a stressed interest rate rather than the product rate.

Are buy-to-let mortgages interest-only?

Most are. Interest-only keeps the monthly payment low, which helps the rent cover the cost and preserves cash flow. The loan balance does not fall, so the eventual exit is selling, refinancing, or repaying from other funds. Repayment buy-to-let mortgages exist and suit investors prioritising long-term debt reduction over monthly income.

What income do I need for a buy-to-let mortgage?

The property's rent does most of the qualifying work, but many lenders also set a minimum personal income, commonly around 25,000 pounds, and almost all require you to already own your own home for a first buy-to-let. Specialist lenders serve cases outside those rules.

What is a portfolio landlord?

Under PRA rules, anyone with four or more mortgaged buy-to-let properties is a portfolio landlord. From the fourth mortgaged property, lenders must underwrite your whole portfolio, usually requesting a schedule of properties, rents and mortgages plus a business plan, rather than assessing the new purchase in isolation.

Buy-to-let mortgages explained

Deposits, interest cover ratios, stress rates and the difference between what a lender will give you and what you should take.

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A buy-to-let mortgage is sized by the rent, not your salary. Lenders typically lend up to 75% of the property value on an interest-only basis, provided the expected rent covers 125% to 145% of the interest calculated at a stressed rate. That rental cover test, not the deposit, is what most often limits how much you can borrow.

How buy-to-let lending differs from a homebuyer mortgage

A residential mortgage asks whether your income supports the payments. A buy-to-let mortgage asks whether the property's rent supports them, with your income as a backstop. Three practical differences follow. Deposits are larger, with 25% the working standard. Pricing is higher than residential lending at the same loan to value. And most buy-to-let lending sits outside FCA regulation because it is classed as a business loan, which puts more responsibility on you to check the deal suits your plan.

The stress test that sets your maximum loan

Lenders apply an interest cover ratio (ICR) at a stressed interest rate. The PRA expects lenders to test affordability at the higher of the product rate plus two percentage points or 5.5%, although five-year fixed products can be tested at the actual pay rate, which is why longer fixes often unlock larger loans.

Worked example: what rent supports what loan

Suppose a 150,000 pound purchase at 75% loan to value, so a 112,500 pound interest-only loan. At a 5.5% stress rate the stressed interest is about 516 pounds a month. A basic-rate taxpayer needs rent of 125% of that, about 645 pounds. A higher-rate taxpayer at 145% needs about 748 pounds.

If the achievable rent is only 700 pounds, the higher-rate borrower's loan is cut until the test passes, meaning a bigger deposit for the same property. Run this arithmetic before you offer; it is the most common reason buy-to-let purchases are renegotiated late. The mortgage calculator runs it for any price and rent.

This is also why area selection and financing interact. A 6.5% yield area passes the stress test with room to spare; a 4.5% yield area may simply not leverage at 75% no matter how good the street looks. The Investment Map shows gross yields by area precisely so you can see where the test clears.

Interest-only or repayment

Most landlords choose interest-only. The payment is lower, the rental cover test is easier to pass, and the difference can be saved or reinvested. The trade is that the debt never shrinks: you are relying on rents, eventual sale proceeds or a refinance to deal with the balance. Repayment suits investors whose goal is an unencumbered property at retirement rather than maximum cash flow today. There is no universally right answer, but there is a right answer for your plan, which is why our leverage lesson treats debt as an amplifier to be sized, not a default setting.

Limited company and portfolio landlord rules

Key facts

Limited company products usually price 0.5 to 1.0 percentage points above personal equivalents and lenders require personal guarantees from directors.
Lenders prefer a clean special purpose vehicle (SPV) with property SIC codes over a trading company.
Company ICR tests are often set at 125% regardless of the director's tax band, which can make company borrowing stretch further for higher-rate taxpayers.
Four or more mortgaged buy-to-lets makes you a portfolio landlord: expect whole-portfolio underwriting with a property schedule and business plan.
First-time landlords face a narrower lender panel; most want you to own your own home already.

Fees and rate types worth comparing properly

Buy-to-let pricing leans heavily on arrangement fees. A headline rate can hide a fee of 2% to 3% of the loan, sometimes more on limited company products, so compare deals on total cost over the fixed period rather than rate alone. Beyond that, the choices are familiar: two-year fixes price flexibility, five-year fixes buy certainty and a friendlier stress test, and trackers suit investors with the buffer to absorb payment swings. Whatever you pick, diarise the product end date; reverting to a lender's standard variable rate is the most expensive default in property finance.

Frequently asked questions

What deposit do I need for a buy-to-let mortgage?: Most buy-to-let lenders cap lending at 75% loan to value, so the standard deposit is 25% of the purchase price. A handful of products reach 80%, priced noticeably higher, and the most competitive rates start around 60% loan to value.
What is the interest cover ratio (ICR)?: The interest cover ratio is the lender's core affordability test: expected monthly rent divided by the stressed monthly interest payment. Lenders typically require 125% for basic-rate taxpayers and around 145% for higher-rate taxpayers, calculated at a stressed interest rate rather than the product rate.
Are buy-to-let mortgages interest-only?: Most are. Interest-only keeps the monthly payment low, which helps the rent cover the cost and preserves cash flow. The loan balance does not fall, so the eventual exit is selling, refinancing, or repaying from other funds. Repayment buy-to-let mortgages exist and suit investors prioritising long-term debt reduction over monthly income.
What income do I need for a buy-to-let mortgage?: The property's rent does most of the qualifying work, but many lenders also set a minimum personal income, commonly around 25,000 pounds, and almost all require you to already own your own home for a first buy-to-let. Specialist lenders serve cases outside those rules.
What is a portfolio landlord?: Under PRA rules, anyone with four or more mortgaged buy-to-let properties is a portfolio landlord. From the fourth mortgaged property, lenders must underwrite your whole portfolio, usually requesting a schedule of properties, rents and mortgages plus a business plan, rather than assessing the new purchase in isolation.

Sources and further reading

Written by the Clarity Property Investments research team. Last reviewed 12 June 2026. This article is general information, not financial or tax advice.